One of New Zealand’s largest paper mills will stop processing paper, with the Oji Fibre Solutions-controlled Kinleith Mill focusing on pulp instead of its loss-making paper production from June 2025.
That is according to Oji Fibre Solutions CEO, Jon Ryder, who, in a statement on Friday, revealed that the mill will now fully transition to a “paper import model” amid skyrocketing power prices—up more than 600% over the past two years, the cost of logs and aging equipment.
“After extensive work and considering various options and feedback from Unions and our team, we see no feasible alternative to our proposal to simplify operations, which will keep Kinleith Mill operating, maintain jobs in the region and continue a reliable product supply to our customers,” Mr Ryder said. “Therefore, we will proceed with our proposal to transition the mill to a new operating model by focusing on pulp and ceasing loss-making paper production,” he said.
“We can confirm that we will permanently shut the PM6 paper machine at Kinleith Mill at the end of June 2025 and move to a paper import model for our packaging operations.”
Oji CEO Jon Ryder who revealed that more than 230 jobs will be lost in the restructure.
In November, Mr Ryder revealed that the cost of manufacturing paper had become unprofitable in New Zealand – with paper production at the Kinleith mill suffering significant losses for several years, with no signs of improving.
It comes after Wood Central revealed in August that New Zealand’s energy prices are now among the highest in the Western World. This led Christopher Luxon, the country’s prime minister, to warn that the country is facing “an energy security crisis.” At the time, Oji—one of six Japanese conglomerates heavily invested in the New Zealand forest products industry—pressed the Luxon Cabinet to provide instant relief over “terminal” electricity price rises.
In Ryder’s statement, provided to 1 News in full, he said Oji “will work with our people on a new mill structure and processes, and the outcome will define role requirements moving forward.”
“We know for many of our people and the local and regional community, this is not the news anyone was hoping to hear,” Mr Ryder said. “We recognise the impact on our people and their loved ones and will be wrapping support around them.”
Ryder said the “difficult” decision was “in no way a reflection of the team’s experience, skills, dedication and leadership at Kinleith Mill”.
Ryder said the decision would:
- Keep the mill operating and reduce the complexity involved in running the mill
- Maintain continuous supply to pulp customers
- Introduce a new supply model for packaging operations
- Create projected profit rather than ongoing losses for the mill
- Reduce energy footprint and exposure to the NZ energy market
- Avoid exposure to expensive saw log fibre supply
South Waikato Mayor Gary Petley said today the district council would “proactively support” people who have been made redundant and help contractors find new work through a programme called “Project Phoenix”.
“It is disappointing that the paper production line is closing, and we sympathise with those who have lost jobs and contracts. Through Project Phoenix, the Council is collaborating with Kinleith owner Oji, Government, Ministry of Social Development, community organisations, educational and training institutes, and businesses operating in South Waikato to help employees and contractors transition to new employment.”
- To learn more about the challenges faced by the New Zealand paper and pulp industry, and the impact of power prices on the economics of New Zealand’s manufacturing industry, click here for Wood Central’s special feature.
